The global steel sector will have to prioritize decarbonisation to meet the challenging goal of reducing carbon emissions by 75% to keep global warming at 2 degrees Celsius, according to Reuters, according to consulting firm Wood Mackenzie.
On August 10, a new report from Wood Mackenzie said cutting global metallurgy emissions to 780 million tonnes of carbon dioxide by 2050 from 3 billion tonnes in 2020 will be a daunting task for an industry that accounts for 7% of global greenhouse gas emissions.
Mihir Vora, senior analyst at Wood Mackenzie, said that along with decarbonization, advanced economies will need to adopt more innovative methods of steelmaking, such as the use of hydrogen.
“The challenges to success are enormous, and overcoming them will require immediate action by steel producers, huge capital expenditures, technical cooperation ... and government policy support,” said Mihir Vora.
Demand for the key industrial metal is expected to grow 23% to 2.3 billion tonnes between 2020 and 2050, driven mainly by emerging economies including India, Southeast Asia and South America, Wood Mackenzie said.
In contrast, consumption in China, which produces almost 60% of the world's steel, will slow down over the same period after peaking in the near future. According to Wood Mackenzie, emissions in China must be 88% lower than current levels to meet the target.
To meet 2 degrees Celsius, the steel sector needs to double scrap input, triple direct reduced iron (DRI) production and use, and capture and store 45 percent of its residual carbon emissions, Wood Mackenzie said.
It is also proposed to reduce the emission intensity from the world's average electric arc furnaces by 70% and to reduce the emission intensity of oxygen furnaces by 30% compared to current levels.
However, the consulting company said premium iron ore suppliers would benefit and predict a 35% growth in the pellet market.
“DRI requires very high iron ore feedstocks,” said Rohan Kendall, head of the company's iron ore research department.
With increased hydrogen injection into steelmaking, Wood Mackenzie said, demand for metallurgical coal is expected to halve by 2050, although some Chinese offshore plants may continue to supply high-quality coking coal while India will double its imports.